It pays to save

For the last three years, Virginia state and local government agencies have been participating in a demand response program that pays them money to reduce their energy use during times of peak electricity demand. Last year, the program generated nearly $3.2 million total for 75 participating state and local agencies.

In September 2007, the Virginia Department of Mines, Minerals and Energy (DMME) contracted with Campbell, Calif.-based EnergyConnect to offer integrated demand response services on a performance basis with no set up costs to the state. The company coordinates with Valley Forge, Pa.-based PJM, the regional transmission organization, and state and local government agencies that agree to reduce their electric consumption in response to grid emergencies (Capacity) or price-based (Economic) demand response opportunities.

The company enrolls agencies, provides technical support and pays enrollees for their participation. The company consults with new users to create curtailment plans and communication profiles, and the agencies agree to be on stand-by to respond to as many as 10 events annually.

For a Capacity Demand Response event, the company calls and emails the designated points of contact at each facility at least two hours before the emergency event. For a voluntary Economic Demand Response opportunity, registered facility managers receive an email when the agency's predetermined earnings target is met. They log in to a web-based portal that shows customer-specific energy use and baseline information with electric market information. If they decide the upcoming demand response event is viable, the facility voluntarily curtails load for that period of time.

In either event, agencies can reduce their energy use in several ways, such as by dimming lights, pre-cooling or pre-heating buildings overnight, and raising or lowering temperatures. Participants are paid based on their actual curtailed energy load compared to their committed level of curtailment. EnergyConnect receives payment on behalf of participating agencies and forwards payments to participants. Payments are a redistribution of utilities' demand fees, which are commonly charged to provide peaking service to customers.

During the economic downturn, the demand response program's revenue-generating potential decreased because statewide energy demand dropped, according to Tommy Thompson, energy manager for Virginia DMME. But, DMME extended its contract with EnergyConnect in December and expects greater need for demand response as the economy improves. Interested agencies in Virginia have until March 15 to enroll in this year's program.

Project: Demand response program
Jurisdiction: Virginia
Agency: Department of Mines, Minerals and Energy
Vendor: Campbell, Calif.-based EnergyConnect
Date began: September 2007